Tag: agriculture

Here is where things stand for Brazil’s major agricultural products at the start of the New Year

Soybeans – a stubborn early drought eventually gave way to adequate rainfall, but too late to maintain the second crop window for some farmers. Conab (Brazilian national supply agency) surprised some by raising the soybean production forecast to 95.8 million tons, based on increased planted acreage and more regular rainfall. The phytosanitary emergency in response to the voracious Helicoverpa caterpillar has been extended in key Brazilian agricultural states. Last year’s soybeans followed by soybeans experiment (soybeans replacing corn as the ‘safrinha’ crop) can be classified as a phytosanitary failure and an economic success, as rust and pests proliferated but farmers earned more from double soybeans than they did from corn. Double cropped soybeans is an unsustainable practice that threatens the Brazilian soybean industry as a whole and it should be banned as soon as possible. Look to the Ministry of Agriculture for leadership on this important issue. The press should be addressing this issue and is not. January 19th Update – The soybean-free phytosanitary period in Mato Grosso has been expanded from 90 to 120 days

Corn – corn production is generally expected to decrease, reflecting an overall smaller ‘safrinha’ crop due to delayed soybean planting driven by early season drought and poor financial prospects for the crop. But hold on to your seats, now the strong dollar is making corn more attractive. Use of corn feedstock as an off-season supplement to sugar cane for ethanol production is increasing in Brazil.

Sugar cane – sector is in deep crisis, driven by subsidized gasoline prices and drought. The current world trend towards lower petroleum prices will likely hurt the sector, but an increase in the mandatory ethanol/gasoline blend to 27% planned for February should help. The first second generation ethanol plant in the country was recently opened by Raizen.

Cotton – worldwide demand for cotton is expected to grow 3.8% in 2014/15, following a 1% decrease in 2013/14. In 2013/14, supply exceeded demand for the fifth consecutive season. 2014 is projected to be the second best year in history for Brazilian cotton exports.

Coffee – Arabica coffee production fell 15.6% this year, due in part to the strong drought at the start of the year. The producing states most affected were Parana (-66.1%) and Minas Gerais (-18.1%). In contrast, robusta production increased by 20%. A weather specialist has warned of new periods of prolonged drought in coffee growing regions of southern Minas Gerais.

Beef – The headline, translated from the Portuguese, reads: “2014 was the best year of all times for Brazilian livestock (cattle)”. Average prices were high and there were gains across the supply chain. 2014 also saw record exports of US $7 billion. The outlook for 2015 is (appropriately) bullish as Brazil takes advantage of the end of embargoes in several markets.

Exports – 2014 was a good year for Brazilian exports, driven by the opening of many markets, including: Russia, Mexico, Japan, South Africa, China, Korea, Colombia, Iraq, Iran, Egypt and Thailand. Prospects for 2015 continue to be bright.

Reprinted with permission of Mark Horn, president at Mark Horn and Associates LLC

Agriculture Committee of the House of Representatives approves purchase of agricultural land by foreigners

The Agriculture Committee of the House of Representatives approved on Wednesday (13th of June 2012) the text of the bill that allows the acquisition of large plots of land by Brazilian companies controlled by foreigners. Today, the actual limit is up to 100 “fiscal units” (módulos ficais).

Fiscal unit is a unit of land measurement used in Brazil. It is expressed in hectares and is variable and is determined for each municipality, taking into account:

main type of farming in the municipality;

proceeds from the exploitation prevalent;

other farms in the municipality which, although not predominant, are expressive function of income or area used;

concept of family property.

Today, by law, foreign companies can buy up to 5 000 hectares, never exceeding 25% of the municipal area of the location of the farm. Citizens of the same foreign nationality can not together have more than 10% of the area of a municipality.

The text proposes that Brazilian companies with foreign capital are treated as domestic companies, no limit for land acquisition. The companies and foreign people, who currently limit the acquisition of 100 and 50 fiscal modules, respectively, can now acquire up to one quarter of the municipality where the farm.

The proposal also eliminates the authorization or license from the National Institute of Colonization and Agrarian Reform (Incra) for acquisition by foreigners of rural property tax of up to four modules and rental tax of up to ten modules. The legislation established the current limit of three modules operating indefinitely.

Non-governmental organizations

The acquisition of land by non-governmental organizations (NGO’s) with foreign capital or headquarters outside of Brazil, which is not mentioned in current law, is prohibited in the new proposal. Upon approval, the report will be turned into a bill and distributed to other committees for analysis, then, be voted on in Congress.

Over the last decade, Brazil has become fertile source for creativity and disruptive business models. The innovation revolution is alive both among start-ups and among the thousands of Brazilian multinationals. A new report from INSEAD and the OECD Development Centre argues that by developing new business models, “in several revealing cases, Brazilian businesses are redefining global business”.

Bug Agentes Biológicos mass-produces wasps to combat larvae and stinkbugs that threaten sugarcane and soybean plants, two of Brazil’s largest cash crops. This past year, Bug perfected a way to spray its wasps onto soy fields, just as pesticides are spread via airplane. “We can liberate the insects in the right dose, at the right speed, and with the right protection so they can be effective,” says Francisco Jardim, a Brazilian VC who has invested in Bug and sits on its board. Wasps, for example, need to be protected until their wings grow big enough for flight, or else ants present a threat. (Isn’t nature grand?)

Bug’s timing feels right. Brazil is the world’s third-largest agricultural exporter (behind the United States and EU); it recently passed the U.S. as the largest consumer of pesticides. Yet the country has begun to phase out the more noxious chemical pesticides Brazilian farmers use despite diminishing effectiveness. Bug has the only alternative approved by Brazilian agricultural, health, and environmental ministries. It’s currently at 100% capacity with plans in 2012 to double the acreage it covers.

The boo-box is the largest Internet advertising technology in Latin America. An ad network that offers innovative solutions targeting technology and different formats of advertisements for the web. In their network appears around 3 billion ads per month. Boo-box has more than 40,000 affiliate publishers that produce content every day on their blogs, websites and social network profiles. The subjects dealt with by our publishers are the most diverse, for all tastes and audiences: automotive, beauty, food, health, tourism, and more. There are 310,000 websites and blogs in total, and 23 000 profiles Twitter! All this great content attracts audience: more than 80 million people per month, equivalent to 100% of Internet users in Brazil. People interested in staying on top of all that is happening on the internet and the world. technology of boo-box bridges the gap between advertisers who want to communicate with this audience, and publishers that offer advertising space on their websites and blogs.

The Brazilian advertising network exploded last year, quintupling the number of ads it placed to reach some 80% of its home country’s web users. The key, says founder Marco Gomes, is creating novel ad formats “where people are already paying attention,” such as in Twitter feeds or blog text. Next up: targeting all of Latin America. “There’s a lot of room to grow,” says Gomes, citing a recent merger with Argentine semantics firm Popego. “The car isn’t the center of our culture anymore, it’s the computer.

3 – EBX

For bringing fresh dirt. Brazil’s march toward self-sufficiency got an extra push from EBX this year. Grupo EBX’s Acu Superport, originally dreamed up as a “highway” to send raw goods to China, will now include a compound capable of holding 3 million tons of nitrogen-enriched fertilizer a year. Acu’s infrastructure can shuttle the resource to Brazil’s three major regions responsible for 87% of the country’s agricultural output.

For going where the clients are. Brazil’s largest IT services company cemented its global presence by expanding further into fellow emerging economy and outsourcing powerhouse, China. Stefanini also has designs on making inroads in Japan: Its new software development center is located in Jilin , a city in China that has a large Japanese-speaking population.

For serving and protecting its country. New ventures into defense and security will pay off for the world’s fourth-largest aircraft manufacturer and its home country. Embraer has its eyes set on building Brazil’s first geostationary satellite, a move that will boost the country’s communication, remote imaging, and weather prediction capabilities.

Petrobras has operations in the entire oil and gas productive chain and in the production of biofuels and of other alternative energy sources.

Petrobras recently made the biggest oil discoveries in Brazil in the pre-salt layer located between the states of Santa Catarina and Espírito Santo, where major volumes of light oil were found.

The first results indicate very large volumes. Just to have an idea, the Tupi accumulation alone, located in the Santos Basin, has recoverable volumes estimated at 5 to 8 billion barrels of oil equivalent (oil plus gas). Meanwhile, the Guará well, also in the Santos Basin, holds 1.1 to 2 billion barrels of light oil and natural gas.

For shoring up innovation in the Gulf of Mexico, post-Deepwater Horizon. This year, Petrobras received long-awaited U.S. Interior regulatory approval for the first floating deepwater oil and natural gas production and storage facility in the Gulf, positioning it to lead other energy companies toward what’s being billed as a safe new way to tap into natural resources. Located 165 miles off the Louisiana coastline, Petrobras’ Chinook-Cascade facility’s mobility makes it stand out from typical fixed platform sites; it can be unhooked and moved out of the path of hurricanes to avoid long-term oil shortages. The project has 600,000 barrels of oil storage capacity and can process 80,000 barrels per day.

For opening the app marketplace to web developers. São Paulo-based Predicta launched SiteApps in April 2011 as a platform for easy-to-use website optimization. Developers can post their free or paid apps on the site; users can then install the tool (from analytics to social media widgets) onto their websites.

For defining the way Brazil does local. Apontador has long moved away from its mapping roots to become the top geolocation service company in Brazil. In 2011 it rolled out Apontador+, a feature that lets businesses create pages on the site to see how Apontador users (more than 12 million a month) interact with their brand.

For bringing radio to gaming. Fresh from a copyright infringement settlement with Zynga, Vostu soldiers on as the first company to incorporate radio into its social gaming. Users can now hear Brazilian pop hits and gaming advice instead of canned music and sound effects while building farms and cities on its popular games MiniFazenda and MegaCity. Listeners can also earn rewards by completing in-game missions promoted on the station.

After ten days of touring Southern Brazil in early February, 34 U.S. farmers from 10 states came away very impressed with this country’s agricultural potential, despite the drought that withered crops on most of the farms we visited.

Brazil’s GDP Growth Slows

Brazil’s GDP grew at a 2.5 percent annualized rate in the second quarter, down from 5.4 percent in the first quarter, and somewhat lower than its year-over-year growth of 3.2 percent. GDP is now 7.8 percent above its pre-recession peak.

Brazil's real GDP Growth

By Sector

Brazil continued its trend toward services and away from industry. While services contributed 1.6 percentage points to annualized quarterly growth, industry subtracted 0.1 percentage point from overall growth (the remainder of the 3.2 percentage points was contributed by agriculture and net taxes).

In the first quarter, manufacturing (the worst-performing sector since the recession) began to close the gap with finance and insurance (the best-performing sector since the recession), as manufacturing grew at its fastest rate in a year while finance shrank for the first time since 2008. In the second quarter, however, the gap widened again. Finance returned to positive, if modest, growth at an annualized 2.3 percent rate, while manufacturing shrank by 0.8 percent, annualized. Finance has now risen to 20 percent above its pre-recession peak, growing 4.5 percent since the second quarter of 2010. Manufacturing, in contrast, is still struggling to reach its 2008 levels. Since the second quarter of 2010, it has grown 1.2 percent, but since the pre-recession peak its growth has averaged an essentially-flat -0.1 percent per year.

By Expense Category

Domestic sources of demand — private consumption, government spending, and gross fixed capital formation — all grew faster than overall GDP in the second quarter. The only expense category to hurt GDP was the worsening trade balance, discussed in more detail below.

Private consumption, government spending, and gross fixed capital formation all accelerated their growth in the second quarter. Private consumption rose at a 3.7 percent annualized rate, up from 2.6 percent in the first quarter. Over the last four quarters, it has grown 5.7 percent. It has averaged 5.1 percent annual growth for the business cycle. Government spending grew at a 5.9 percent annualized rate — its fastest growth in a year — up from 3.4 percent in the first quarter and negative 1.1 percent in the last quarter of 2010. This brings its four-quarter growth up to 1.9 percent. Gross fixed capital formation expanded at a 6.4 percent annualized rate, above its year-over-year growth of 6.2 percent.

Both exports and imports bounced back after losing ground in the first quarter. However, imports grew at a much faster pace: 31.4 percent annualized compared to 9.7 percent for imports. The result is that the trade deficit widened, from 0.4 to 0.9 percent of GDP, after two quarters of improvements. The previous two quarters’ improvement was largely due to falling imports, so over the past four quarters, imports have grown by only 13.4 percent. Exports have remained much more stable, growing 6.3 percent over the past four quarters.

On August 31, the central bank lowered the Selic rate from 12.5 to 12 percent, in a move that surprised markets. The real has fallen against the dollar from 1.59 on August 31 to 1.86 today. With the global economy slowing, it appears that Brazilian policy makers — who had previously moved to slow the economy after last year’s 7.5 percent growth — may be reversing course. With IMF projections for economic growth in the U.S., Europe, and elsewhere revised downward in last week’s World Economic Outlook, and a number of warnings of downside risks, moves toward a more expansionary macroeconomic policy would appear prudent.

Attribution: Rebecca Ray is a Research Associate at the Center for Economic and Policy Research in Washington, D.C. This article was first published by CEPR on 30 September 2011 under a Creative Commons license.